TWoN Chapter 9

Page 122: “The increase of stock, which raises wages, tends to lower profit.”  He explains this as due to competition, which makes sense.

Page 123: “It may be laid down as a maxim, that wherever a great deal can be made by the use of money, a great deal will commonly be given for the use of it.”  So that interest comes out of profit, and tends to follow profit.  “The progress of interest, therefore, may lead us to form some notion of the progress of profit.”

Discussion of historical trends in profit, comparison of interest in city and town England, Scotland, France, Holland.

Page 129: “A new colony must always for some time be more under-stocked in proportion to the extent of its territory, and more under-peopled in proportion to the extent of its stock, then the greater part of our countries.”

“A great stock, though with small profits, generally increases faster than a small stock with great profits.”  This makes sense, and will, at least in part, account for the general tendency for large corporations to swallow smaller ones.

On page 130 he discusses the expansion of capital into new territories and trades: “The stock of the country not being sufficient for the whole acquisitions present to teh different people among whom it is divided, is applies to those particular branches only which afford the greatest profit.”

Page 131: The dimunition of the capital stock of the society, or of the funds destined for the maintenance of industry, however, as it lowers the wages of labor, so it raises the profits of stock, and consequently the interest of money.”

Page 133: “When the law does not enforce the performance of contracts, it puts all borrowers nearly upon the same footing with bankrupts or people of doubtful in better regulated countries.”  This is very important!  The more capital becomes vital–that is, the more manufacturing expands–the more the power of the State is required to take a hand in private matters of manufacture.  In other words, capitalism will naturally require a larger, more sophisticated, and more complex State than earlier economic forms.

More on the interaction of the law (ie, the State) and interest: “When the law prohibits interest altogether, i;t does not prevent it.  Many people must borrow, and nobody will lend without such a consideration for the use of their money as is suitable, not only to what can be made by the use of it, but to the difficulty and danger of evading the law.  The high rate of interest among all Mahometan nations is accounted for by Montequieu not from their poverty, but partly from this, and partly from the difficulty of recovering the money.”

A bit of observation I like on page 135: “As a man of a civil profession seems awkward in a camp or a garrison, and is even in some danger of being dispised there, so does an idle man among men of business.”

Page 136: “In reality high profits tend much more to raise the price of work than high wages.”

Page 137: “Our merchants and master manufactures complain much of the bad effects of high wages on raising the price, and thereby lessening the sale of their goods both at home and abroad.  The say nothing concerning the bad effects of high profits.  They are silent with regard to the pernicious effects of their own gains.  They complain only of those of other people.”